Human Resources News & Insights

Court voids key parts of EEOC’s wellness regs: Here’s what happens next

When a federal court asked the EEOC to reconsider its rules on wellness incentives under the ADA and GINA, it expected the agency to move swiftly with its response.

And it looks like the court wasn’t too happy with the agency’s efforts.

The court just “vacated” – i.e., voided – the wellness rules that pertain to incentives and the ADA and GINA beginning on Jan. 1, 2019.

How we got here

First, some background on how we got to where we are now.

The lawsuit in question, AARP v. EEOC, centered around the legality of the EEOC’s recent wellness regs.

Specifically, the case hinged around the notion of a “voluntary” wellness program. Under the EEOC regs, employers can offer incentives of up to 30% of the total cost of coverage for self-only coverage for participation in company-sponsored wellness programs that include components like health-risk assessments (HRAs) and biometric screenings.

The AARP argued that such an incentive ran counter to the “voluntary” requirements of the ADA and GINA because employees who can’t afford to pay a 30% increase in premiums would essentially be forced to give up protected information that they wouldn’t have chosen to disclose otherwise.

In other words, the way the EEOC’s current regs are written allow for involuntary programs that could put workers at risk of being discriminated against, according to the AARP’s lawsuit.

Double the cost for most

U.S District Court for the District of Columbia Judge John D. Bates sided with AARP and agreed the EEOC hadn’t explained the reasoning behind its wellness compliance regs with respect to both the ADA and GINA.

In a memorandum, Judge Bates said allowing employers and insurers to offer a 30% incentive for wellness program participation wasn’t “sufficiently remedied” by the fact that these programs were supposed to be completely voluntary.

Bates expanded on this stance by stating that there was nothing “that explains the [EEOC’s] conclusion that the 30% incentive level is the appropriate measure for voluntariness,” and that such an incentive “is actually not consistent with HIPAA.”

He went on to add that “the ‘voluntary’ provision of the ADA to permit incentives of up to 30% is thus deeply flawed.”

Then, Judge Bates, went on to specifically spell out the problem he found with the EEOC’s incentive percentage (for both ADA and GINA purposes) by stating:

“.. based on the average annual cost of premiums in 2014, a 30% penalty for refusing to provide protected information would double the cost of health insurance for most employees. At around $1,800 a year, this is the equivalent of several months’ worth of food for the average family, two months of child care in most states, and roughly two months’ rent.”

Despite pointing out so many problems with the EEOC’s regs, Bates decided not to kill the current regs, claiming such a move would wind up causing “significant disruptive consequences.”

Therefore, the court ordered the agency to reconsider the current regs.

Wasn’t ‘timely’ enough

And it’s how the EEOC chose to respond that drew a court’s ire.

The EEOC responded by saying it didn’t expect to issue new proposed regs until August 2018, with final rules likely by August 2019 and an effective date of early 2021.

The court didn’t consider that timetable “timely” enough.

In vacating the rules, the court said it would:

“hold EEOC to its intended deadline of August 2018 for the issuance of a notice of proposed rulemaking. . . . But an agency process that will not generate applicable rules until 2021 is unacceptable.”

Remember: Until Jan. 1, 2019, employers are technically still required to comply with the current wellness regs the EEOC issued.

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  • Tom

    Most of the wellness BS that companies push is just that BS. Insurance would be cheaper if insurance companies focused on what they are paid to do pay claims and quit trying to find ways to screw their policy holders and in the process run up costs with stupid programs.